The
whole history of civilization is strewn with creeds and institutions which were
invaluable at first, and deadly afterwards.
Walter
Bagehot.
Has
the EUSSR entered its death throes? The
unnerving answer is possibly. Brexit now!
Sadly
yesterday, Catalonia and Spain went nuclear, rather than follow Italy’s
sensible 21st century approach of negotiations with separatist
tendency regions. An even better approach is the civilised UK-Scotland, Canada–Quebec
examples, and just hold a legitimate referendum,
and then negotiate a mutually beneficial separation or new devolved powers,
depending on outcome. Under Mutual Assured Destruction, neither the people of
Catalonia nor Spain get an improvement in their lifestyle or prosperity, just
the opposite. The anti-democratic EUSSR
gets an economic drag, and rightly shown up for just how anti-democratic and
statist it has become.
Below,
the unfolding, unnecessary, tragedy of Spain v Catalonia. Euros anyone?
“The most puzzling development in politics during the last
decade is the apparent determination of Western European leaders to re-create
the Soviet Union in Western Europe.”
Mikhail Gorbachev
Spain Gets Ready to Take Control After Catalonia Declares Independence
By Maria Tadeo Esteban Duarte, andRodrigo Orihuela
Catalonia
is headed for a dramatic confrontation with Spain after the insurgent region’s
parliament voted to declare independence and the government in Madrid gained
the power to oust its separatist leadership.
The
resolution approved by lawmakers in Barcelona said the establishment of
Europe’s newest sovereign country had been set in motion. The portion of the
text submitted to a vote included measures to ask all nations and institutions
to recognize the Catalan Republic.
Meanwhile
in Madrid, the Spanish Senate approved measures giving Prime Minister Mariano
Rajoy the power to seize control of the Catalan administration via Article 155
of the 1978 constitution. The legislation already has come into force.
"The
Catalan Parliament has approved something that in the opinion of the great
majority of people doesn’t just go against the law, but is a criminal act
because it supposes declaring something that is not possible,” Rajoy said
before an early evening cabinet meeting.
Catalonia’s
tumultuous push for independence reached its climax with regional President
Carles Puigdemont squeezed by the irreconcilable demands of his own hardliners
and authorities in Madrid. In the past 48 hours, the Catalan leader sought to
avoid the chaos of an illegal secession without provoking anger among his base,
to no avail.
Spain’s
10-year bonds dropped, with the spread against benchmark German bunds widening
by seven basis points to 119 basis points. The country’s benchmark stock index,
the Ibex, fell 1.4 percent, all but erasing Thursday’s gain when it looked like
all-out declaration of independence might be avoided.
“We
constitute the Catalan Republic, as an independent and sovereign country, under
the rule of law,” Catalan parliamentary speaker Carme Forcadell read out before
the secret ballot. Separatist lawmakers broke into the Catalan anthem after the
vote, which was boycotted by opposition parties.
"The clash is here and it won’t be pretty,” Antonio Barroso, a political risk analyst at Teneo Intelligence in London, said in an email to clients. "Tensions are likely to rise significantly over the coming days, especially as secessionist groups mobilize to stop the implementation of Article 155.”
European Union President Donald Tusk said on Twitter that nothing has changed in the policy toward Catalonia and Spain "remains our only interlocutor." He said he hoped the Spanish government "favors force of argument, not argument of force.”
Germany also said it was behind Rajoy. Government spokesman Steffen Seibert urged both sides to consider all options for dialogue and de-escalation.
The semi-autonomous Scottish government, which held a referendum in 2014 on breaking away from the U.K., echoed the call for talks, though said Catalans must have the right to determine their own future.
More
October 27, 2017 / 1:43 AM / Updated 10 hours ago
Euro posts worst week in 2017 on dovish ECB, Catalonia vote
NEW YORK (Reuters) - The euro fell on Friday, marking
its biggest weekly loss of the year a day after the European Central Bank
decided to prolong its bond purchases and signaled its willingness to stick
with an ultra-loose policy stance.
The
tension between Madrid and Catalonia’s secessionists also stoked selling in the
single currency after the Catalan parliament on Friday declared independence
from Madrid following a secret ballot. Spain Prime Minister Mariano Rajoy
retaliated by sacking the Catalan government and set elections on Dec. 21.
“The
dovish surprise from the ECB was its openness to extend the duration of its
bond purchase program,” said Omer Esiner, chief market strategist at
Commonwealth Foreign Exchange in Washington.
On
Thursday, the ECB said it will extend its bond purchases into September 2018
while reducing its monthly purchases by half to 30 billion euros starting in
January.
The move
raised bets the ECB was unlikely to raise interest rates until 2019 as the U.S.
Federal Reserve has remained on its path to hike U.S. rates further.
The Fed
will hold a two-day policy meeting next Tuesday and Wednesday where
policy-makers are expected to leave rates unchanged.
The euro
was down 0.5 percent at $1.1595, bringing its weekly loss against the dollar to
1.6 percent for the biggest in 11 months.
Against
the yen, the common currency was 0.6 percent lower at 131.98 yen after touching
its weakest level in nearly two weeks.
More
Elsewhere
in the visibly failing, wealth and jobs destroying EUSSR: Stupid US/UK trade
sanctions on Russia claim another scalp in Germany, fuelling the rise of the
far right. Not to worry, no one in the
USA or GB is affected by the American War Party sanctions on Russia, neither
exports or buys much there.
“Everything has its drawbacks, as the
man said when his mother-in-law died, and they came down upon him for the
funeral expenses.”
Jerome K. Jerome. Three
Men In A Boat.
October 27, 2017 / 4:08 PM / Updated 8 hours ago
Job cuts could boost populists, German minister tells Siemens
BERLIN (Reuters) - Germany’s economics minister urged
Siemens AG (SIEGn.DE) on Friday to rethink planned job
cuts and said job losses, particularly in economically weaker areas of the
former East Germany, could spur an increase in right-wing populism.
Siemens may cut thousands of jobs as part of plans to
overhaul its power and gas business, which is struggling with lower worldwide
demand for large electricity generating turbines, a person familiar with the
plans told Reuters last week. Up to 11 work sites could be shut down.
The
minister, Brigitte Zypries, told Siemens CEO Joe Kaeser in a letter published
by Bild newspaper that job losses in the former Communist east could have
negative consequences.
“It is
particularly critical when locations in structurally weak regions - for
instance in eastern Germany - are up for discussion,” she told the Siemens
executive. “It can fuel discontentment and doubts and could have political
fallout as we saw in the parliamentary election.”
The
government has no legal authority to prevent private companies from carrying
out layoffs, but it has other ways to pressure firms including through
corporate policies and reviews of export licenses.
In the
case of Siemens, Berlin is currently examining how two Siemens gas turbines
sold for use in Russia turned up in Crimea, a region subject to EU sanctions on
energy technology.
Siemens
spokesman Philipp Encz declined to comment on the letter. He said while several
proposals were under discussion with labour, no decisions had been made on any
job cuts or possible plant closures.
More
Next
France, unsurprisingly, no London banksters have yet slithered off from London
for increasingly dangerous France.
October 26, 2017 / 5:28 PM
Cars torched in attack on French police housing complex
LYON, France (Reuters) - Attackers set fire to vehicles
beneath a housing complex for police and their families in a suburb of
Grenoble, eastern France, on Thursday.
Police
said a fence around the building was closed off in an apparent attempt to
prevent residents escaping and rescuers getting in, but all 24 people inside
escaped unharmed.
Nobody
claimed responsibility for the assault, which was the latest in a series of
arson attacks against police and police vehicles.
“Attacks
like this can be tantamount to terrorism,” Grenoble prosecutor Jean-Yves
Coquillat told reporters, adding that the method used was similar to other
recent attacks by far-left groups.
Last month,
such a group claimed responsibility for an arson attack on a police building in
Grenoble that destroyed a warehouse and several cars.
The group
said the fire was a protest against the trial of nine far-left activists
accused of firebombing police in an assault on two officers in Paris in May
2016 that was caught on camera.
Last
month, five police cars were set on fire in Limoges, central France.
French
police are on high alert after a series of Islamic State-inspired attacks that
have killed more than 240 people in the past three years.
Aside
from the Islamist threat, far-left and far-right militancy has also not let up.
Police this month arrested 10 far-right militants suspected of planning attacks
on mosques and politicians.
And
Italy, well it remained Italy, somethings never change.
Italy is not
technically part of the Third World, but no one has told the Italians.
P. J. O’ Rourke.
October 27, 2017 / 5:58 PM / Updated 13 hours ago
EU says concerned over Italy's 2018 budget, adding to government's woes
BRUSSELS (Reuters) - The European Commission sent a
letter on Friday to Italy’s finance minister urging clarifications over the
country’s planned budget for 2018, adding to Rome’s headaches ahead of
elections due by next May.
The move
could force Rome to cut expenditures or raise taxes to comply with EU fiscal
rules. Both are unpalatable measures before elections planned by May and amid
deepening political divisions within the ruling Partito Democratico (PD).
The EU
executive, which has the power to reject a euro zone country’s budget if it
deems it in serious breach of EU fiscal rules, said Italy’s draft budgetary
plans created risks of “a significant deviation from the required effort in
2017 and 2018 together”.
A source
from Italy’s Finance Ministry said Rome will soon reply to the commission’s
letter and expressed confidence that the clarifications that will be provided
will be sufficient to resolve the matter.
The
unexpected rift with Brussels adds to the woes of Italy’s Prime Minister Paolo
Gentiloni who has recently faced strong criticism from PD leader, Matteo Renzi,
on his confirmation of Bank of Italy’s Governor Ignazio Visco.
The
Italian parliament, which has to approve the budget, is deeply divided and many
lawmakers have already showed little enthusiasm for the low-key budget
presented by the outgoing executive.
Under EU
fiscal rules, Italy was required to have a structural adjustment, which excludes
the economic cycle and one-off measures, of 0.6 percent of its gross domestic
product in 2018.
The
government pledged to reach an adjustment of only 0.3 percent when it presented
its budget in mid October, a move meant to please political forces which oppose
new austerity measures and weaken the appeal of growing populist parties.
The
commission had let Rome understand that it would have approved this smaller
effort. However, it has now estimated that the actual structural effort would
only be 0.2 percent, it said in a letter sent to Italy’s Finance Minister Pier
Carlo Padoan.
More
This
weekend, where we alter the clocks back to real time in the northern
hemisphere, two interesting articles, well worth taking the time to read.
The bubble economy is set to burst, and US elections may well be the trigger
Andy Xie says the failure of central banks to focus on asset inflation has led to rising inequality on the back of mistaken stimuli. More than interest rates, it will be political tensions in the West that will burst the bubble
UPDATED :
Sunday, 08 October, 2017, 6:37pm
Central
banks continue to focus on consumption inflation, not asset inflation, in their
decisions. Their attitude has supported one bubble after another. These bubbles
have led to rising inequality and made mass consumer inflation less likely.
Since the
2008 financial crisis, asset inflation has fully recovered, and then some. The
US household net worth is 34 per cent above the peak in 2007, versus 30 per
cent for nominal GDP. China’s property value may have surpassed the total in
the rest of the world combined. The world is stuck in a vicious cycle of asset
bubbles, low consumer inflation, stagnant productivity and low wage growth.
The US Federal
Reserve has indicated that it will begin to unwind its QE (quantitative
easing) assets this month and raise the interest rate by another 25 basis
points to 1.5 per cent. China has been clipping the debt wings of grey rhinos and pouring cold water on property
speculation. They are worried about asset bubbles.
But, if recent history is any guide, when asset markets
begin to tumble, they will reverse their actions and encourage debt binges
again.
Recently, some central bankers have been puzzled by the
breakdown of the Philipps Curve: that falling unemployment rates would lead to
wage inflation first and consumer price inflation next. This shows how some of
the most powerful people in the world operate on flimsy assumptions.
Despite
low unemployment and widespread labour shortages, wage increases and inflation
in Japan have been around zero for a quarter of a century. Western central
bankers assumed that the same wouldn’t happen to them without understanding the
underlying reasons.
The loss
of competitiveness changes how macro policy works. Japan has been losing competitiveness
against its Asian neighbours. As its population is small, relative to the
regional total, lower wages in the region have exerted gravity on its labour
market. This is the fundamental reason for the decoupling between the
unemployment rate and wage trend.
The mistaken stimulus has the unintended consequences
of dissipating real wealth and increasing inequality. American household net
worth is at an all-time high of five times GDP, significantly higher than the
bubble peaks of 4.1 times in 2000 and 4.7 in 2007, and far higher than the
historical norm of three times GDP. On the other hand, US capital formation
has stagnated for decades. The outlandish paper wealth is just the same asset
at ever higher prices.
The
inflation of paper wealth has a serious impact on inequality. The top 1 per
cent in the US owns one-third of the wealth and the top 10 per cent owns
three-quarters . Half of the people don’t even own stocks. Asset inflation will
increase inequality by definition. Moreover, 90 per cent of the income growth
since 2008 has gone to the top 1 per cent, partly due to their ability to cash
out in the inflated asset market. An economy that depends on asset inflation
always disproportionately benefits the asset-rich top 1 per cent.
There
have been so many theories on why inequality has risen. The misguided monetary
policy may be the culprit. Germany and Japan do not have significant asset
bubbles. Their inequality is far less than in the Anglo-Saxon economies that
have succumbed to the allure of financial speculation.
While Western central bankers can stop making things
worse, only China can restore stability in the global economy. Consider that
800 million Chinese workers have become as productive as their Western
counterparts, but are not even close in terms of consumption. This is the
fundamental reason for the global imbalance.
China’s model is to subsidise investment. The resulting
overcapacity inevitably devalues whatever its workers produce. That slows down
wage rises and prolongs the deflationary pull. This is the reason that the
Chinese currency has had a tendency to depreciate during its four decades of
rapid growth, while other East Asian economies experienced currency
appreciation during a similar period.
Overinvestment means destroying capital. The model can
only be sustained through taxing the household sector to fill the gap. In
addition to taking nearly half of the business labour outlay, China has
invented the unique model of taxing the household sector through asset bubbles.
The stock market was started with the explicit intention to subsidise
state-owned enterprises. The most important asset bubble is the property
market. It redistributes about 10 per cent of GDP to the government sector
from the household sector.
----How is this all going to end? Rising interest rates
are usually the trigger. But we know the current bubble economy tends to keep
inflation low through suppressing mass consumption and increasing overcapacity.
It gives central bankers the excuse to keep the printing press on.
In 1929,
Joseph Kennedy thought that, when a shoeshine boy was giving stock tips, the
market had run out of fools. Today, that shoeshine boy would be a genius. In
today’s bubble, central bankers and governments are fools. They can mobilise
more resources to become bigger fools.
In 2000,
the dotcom bubble burst because some firms were caught making up numbers.
Today, you don’t need to make up numbers. What one needs is stories.
Hot
stocks or property are sold like Hollywood stars. Rumour and innuendo will do
the job. Nothing real is necessary.
More
Finally,
an update on 21st century energy storage devices, mostly batteries.
Has the dangerous, flammable Li-ion technology already won the war? I hope not,
despite all the massive money thrown into the Li-ion sector.
Our
greatest weakness lies in giving up. The most certain way to succeed is always
to try just one more time.
Thomas
A. Edison
Switching From Lithium-Ion Could Be Harder Than You Think
Electricity storage based on cheaper materials faces an uphill struggle.
Jason
DeignOctober
19, 2017
Massive investments in lithium-ion battery production could thwart the
search for other battery options based on lower-cost ingredients, despite the
efforts of numerous lithium-ion contenders.Already, “There are cheaper alternatives in terms of raw materials," said Benchmark Mineral Intelligence analyst Caspar Rawles. "But what we have had happen over the last three years is a huge investment in manufacturing infrastructure for lithium-ion.”
Worldwide, the number of lithium-ion ‘megafactories,’ which Benchmark Mineral Intelligence defines as cell-producing facilities with more than 1 gigawatt-hour of production capacity per year, has gone from just a couple three years ago to around 20 today.
About half of those are in China, Rawles said. At the end of 2016, global lithium-ion battery production capacity stood at 28 gigawatt-hours, with 16.4 gigawatt-hours in China.
Globally, this is set to increase 521 percent, to 174 gigawatt-hours, by 2020, according to BMI forecasts.
China will account for 62 percent of production, with almost 108 gigawatt-hours a year, followed by the U.S. with 22 percent (38 gigawatt-hours), South Korea with 13 percent (23 gigawatt-hours) and Poland with 3 percent (5 gigawatt-hours).
One Chinese company, Contemporary Amperex Technology, is expected to be producing 50 gigawatt-hours of lithium-ion battery storage capacity by 2020, overtaking Tesla’s projected 35 gigawatt-hours.
Even today, the infrastructure “represents billions of dollars in investment [and] huge growth in manufacturing capacity for lithium-ion,” said Rawles.
“You might have cell technology that would be cheaper in terms of raw materials theoretically, but to get to the cost that lithium-ion is at now would take huge investment and isn’t likely to happen," he said.
This may help explain the sluggish progress being made by a host of lithium-ion contenders banking on lower material costs to gain a competitive edge.
Eos Energy Storage, which claims it can provide utility-scale battery storage for $160 per kilowatt-hour thanks to a chemistry based on a zinc hybrid cathode design, has managed to win orders from utilities such as Engie and Con Ed, but is hardly shipping massive quantities.
It is doing better than most, though. Ambri, with a liquid metal battery made from inexpensive, earth-abundant materials, is still in the early stages of commercialization despite raising $50 million in venture capital.
Ecoult, which is touting an advanced lead-acid battery design, earlier this year announced its first steps in creating a global manufacturing network, but does not expect to have licensing deals in place in most energy storage markets until 2019.
And the saltwater battery maker Aquion ran into well-publicized problems earlier this year. In July, it seemed to be back in business after its brush with death. Only time will tell whether the company can grow under its new ownership, however.
Even established non-lithium-ion battery technologies, such as the sodium-sulfur chemistries sold by NGK and others, are having a hard time competing with lithium-ion’s vast market dominance.
Based on U.S. Department of Energy figures cited by the International Renewable Energy Agency, only 4.8 megawatts of sodium-based battery power capacity was announced, contracted or under construction as of this year, against more than 333 megawatts of lithium-ion storage.
Flow batteries face a similar problem. Only one chemistry, vanadium redox, has become established. But International Renewable Energy Agency data shows the chemistry accounted for less than 1 percent of global electrochemical storage power capacity by mid-2017.
Furthermore, some observers believe that if used widely the flow battery chemistry would run into similar supply chain problems as those being flagged for lithium-ion. “There are limits to vanadium,” commented Hugh Sharman, principal at energy consultancy Incoteco.
“The ores are already getting thinner, and if vanadium becomes a major component of energy storage systems, then the price would skyrocket," he said.
Because of this, some flow battery makers have swerved toward chemistries based on more common elements. Energy Storage Systems, for instance, makes a flow battery in which iron is the main component.
The concept looks great on paper but, yet again, is struggling against lithium-ion
The only
categories of energy storage that seem capable of holding their own in the face
of lithium-ion’s electrochemical dominance are those that can deliver truly
massive levels of capacity, such as pumped hydro, compressed air, molten salt
or flywheels.
These
rely on storage media that are so cheap they are practically free in some
cases. And that might be the only thing that keeps them in the game as
lithium-ion scales toward multi-gigawatt-hour levels.
After
all, said Sharman: “Unless a cost-effective way is found to recycle the
components, the practical limit for a lithium-ion battery will be
materials-related. It won’t be related to economies of scale.”
There's
a way to do it better - find it.
Thomas
A. Edison
And
from America, the last word this week from Jason in Lake Tahoe.
Icelandic-Swiss Collaboration
Results in Pioneering Project Achieving “Negative Emissions’’ of C02, the Holy
Grail of Climate Change Mitigation-at a steep price
N. Jason Jencka
October 28th 2017 12:02 am ET
Global efforts to mitigate
anthropogenic climate change have long focused on reducing emissions of carbon
dioxide through emphasis on energy efficiency and the adoption of renewable
sources such as wind and solar. The general consensus of current estimates is
that a roughly 80% reduction in annual emissions would be sufficient to
stabilize atmospheric C02 in a scenario analogous to a bathtub slowly draining
of water once the inflows (emissions) from the faucet are dramatically slowed.
The central challenge with attempting to address C02 emissions in this manner
is the dramatic and unprecedented global lifestyle adjustments required to
stabilize C02 are draconian to the point that feasibility is in doubt.
Commentators on the issue from both the scientific and political spheres have
made the point that technology that would actively remove C02 from the
atmosphere would be an invaluable tool in “buying time” to develop a
sustainable global economy while allowing oil and gas resources to be monetized
rather than stranded.
Recent developments in Iceland
provide evidence that the concept of “negative emissions” may be beginning to
transition from theory toward reality. Swiss startup Climeworks has partnered
with Reykjavik Energy geothermal plant to draw C02 directly from the
surrounding air and inject it into volcanic basalt rock, which reacts with C02
to form a carbonate rock. At present the project only draws 50 tons of C02 from
the air per year which is equivalent to the total emissions of one American
household (or the emissions of 5,000 gallons of gasoline). While costs for
similar technology were estimated at $600-1,000 per ton of C02 in a 2011 report
as compared to 7.5 Euro/ton in the EU carbon credit market, these developments
bear watching due to the potential to dramatically transform the course of
global environmental policy in the 21st century.
Sources:
Ben
Parko, Smithsonian October 19th,
2017: https://www.smithsonianmag.com/smart-news/first-negative-emissions-plant-opens-iceland-180965270/
Avery
Thomson, Popular Mechanics October
13th, 2017: http://www.popularmechanics.com/science/green-tech/news/a28629/first-negative-emissions-plant/
N. Jason Jencka recently graduated in Finance and
Economics from Sierra Nevada College, located near the shores of Lake Tahoe on
the border of California and Nevada. His interests include the interplay
between world markets and the global political sphere, with a focus on developments
of both sides of the Atlantic in North America and Europe. In his leisure time
he enjoys connecting with those people that have an interesting story to tell
and a genuine desire to make an impact in the world.
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